- Morpheus FUZE has accepted the identified findings and proposed a remedy strategy.
- VARA has not disclosed the financial penalty that Morpheus will pay.
- Morpheus recently closed a Series A funding round with $12.2 million led by Galaxy
Dubai’s virtual asset regulator has taken enforcement action against a local blockchain company, Morpheus Software Technology (also known as Fuze), finding it guilty of violating its operating license.
According to the Virtual Assets Regulatory Authority (VARA), an investigation that began in mid-April 2025 found that Fuze had conducted ‘unlicensed virtual asset activities,’ failed to implement proper anti-money laundering (AML) procedures, and lacked regulated internal governance measures.
In its official statement, VARA confirmed it has imposed a financial penalty against the company.
“In light of the aforementioned failures, VARA has taken enforcement actions, including the imposition of a financial penalty against Morpheus (Fuze). VARA notes that Morpheus (Fuze) has accepted the findings identified, and proposed a plan to remedy the aforementioned breaches,” VARA noted.
Related: UAE Travelers Can Now Book Flights with Bitcoin, Ethereum, USDT
What’s Next for Fuze?
Following the penalty, Fuze will now be subject to ongoing and direct regulatory supervision. The VARA’s announcement highlighted that Fuze will get direct supervision by a skilled person to ensure the remedy plans are executed.
“Morpheus (Fuze) will be subject to ongoing supervision by VARA, including fulfilment of remedial actions imposed on Morpheus (Fuze), to secure the marketplace and protect consumers,” VARA added.
Furthermore, Fuze accepted the identified failures following weeks of investigation. The VARA’s notice of fine to Fuze did not disclose the exact financial figure to be paid.
Market Picture
This enforcement action is notable since Morpheus Software Technology has been a fast-growing, high-profile player in the MENA region.
Led by Mo Ali, a co-founder and CEO, Fuze has focused on revolutionizing crypto assets adoption in the MENA (Middle East and North Africa) region.
In May 2025, Fuze announced the closure of its Series A funding round with $12.2 million. The company’s Series A funding round was led by Galaxy, and e& capital, the investment arm of the UAE’s e& technology group.
Related. UAE Regulators SCA and VARA Sign Agreement for Unified Crypto Framework
As a result, Fuze has since raised $20 million, following a previous funding round in 2023 led by Further Ventures and Liberty City Ventures. Remarkably, Fuze has attracted over 300 institutional investors, thus managing to process more than $2.2 billion in transaction volume since its inception.
With the recent regulatory oversight, Fuze may be forced to acquire more operating licenses to venture into the banking and crypto space. Moreover, Fuze intends to scale its operations both regionally and internationally through product innovation and compliance.
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Source: https://coinedition.com/dubais-vara-fines-morpheus-for-aml-and-internal-compliance-failures/
